The much anticipated Agricultural Bill, resulting from the government’s Health and Harmony consultation carried out earlier this year, was published on 12th September initiating the biggest shake-up of farming in a generation. The government’s ambition for a ‘green Brexit’ has now been outlined where farmers will be rewarded for the public good they provide. Michael Gove has said “the Agricultural bill will allow us to reward farmers who protect our environment, leaving the countryside in a cleaner, greener and healthier state for future generations.” We now understand the focus will be on enriching wildlife habitats, flood prevention, improving air quality, protecting soils and planning trees. Farmers will be encouraged to sign Environmental Land Management Contracts replacing direct aid and be paid to protect and preserve the natural environment helping mitigate the effects of climate change; a move praised by many environmental groups. Farmers will also be encouraged to become more resilient, more productive and more competitive and will have access to funds to help boost productivity.
A new innovative relationship between government and land managers is proposed by DEFRA but many see the Bill falling short on addressing key subjects such as the future of food production, food security and the hugely important subject of a successful post Brexit UK trade deal. Ministers have also refused as yet to specify how much public money will be allocated for supporting these initiatives and the Agricultural Bill unfortunately lacks detail on how this will be achieved in practice.
The things we do know – the present funding mechanism will remain for the life of this parliament; and current agri-environment agreements have been given assurances, but many farmers are naturally worried about the future reductions in support payments beyond 2022. The Bill explains how the current system of direct payments will be dismantled, reducing each year over a seven year period with the final Basic Payment being received in 2027. Furthermore the Bill describes how the de-linking of payments from the requirements to farm land will help those wishing to retire or indeed invest in their businesses and still be in receipt of payments; one-off lump sums could be also offered to farmers in place of future direct annual payments.
It is hoped by many that this Bill provides the first steps towards a better future for farming and the environment, but it is clear that the transitional period from 2022 to 2027 is likely to have a negative financial impact on farm profitability. Without doubt there will be winners and losers from the new agricultural policy, the reason why planning for change in good time is essential. Assessing the options for the future is crucially important; the earlier you start planning the better the outcome will be. Regular preparation of budgets, benchmarking businesses annually and comparing key performance indicators at every opportunity is what all business should be doing. Assessing and fully utilising the key assets of the business including its people will be extremely important. Exploring potential new income streams, investigating possible diversification opportunities and understanding the impact new policies will have will be vital for business success. Of course further detail will emerge in the coming weeks and months but now is the time to start planning so farmers can prepare for change and become as resilient as possible.